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An agent-based model of innovation diffusion: network structure and coexistence under different information regimes

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  • Giovanni Pegoretti
  • Francesco Rentocchini
  • Giuseppe Vittucci Marzetti

Abstract

The paper analyzes how the structure of social networks affects innovation diffusion and competition under different information regimes. Diffusion is modeled as the result of idiosyncratic adoption thresholds, local network effects and information diffusion (broadcasting and demonstration effect from previous adopters). A high social cohesion decreases the probability of one innovation cornering the market. Nonetheless, with imperfect information, in small-world networks the higher speed of diffusion produced by the low average distance increases this probability. A low social cohesion also increases the probability of falling into traps of under-adoption. However, such probability is significantly lower with imperfect information, because such regime is characterized by higher levels of market concentrations and this reduces the frictions due to the coexistence of non-compatible product innovations. Copyright Springer-Verlag 2012

Suggested Citation

  • Giovanni Pegoretti & Francesco Rentocchini & Giuseppe Vittucci Marzetti, 2012. "An agent-based model of innovation diffusion: network structure and coexistence under different information regimes," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 7(2), pages 145-165, October.
    • Handle: RePEc:spr:jeicoo:v:7:y:2012:i:2:p:145-165
    DOI: 10.1007/s11403-012-0087-4
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    Cited by:

    1. Paolo Zeppini & Koen Frenken & Luis R. Izquierdo, 2013. "Innovation diffusion in networks: the microeconomics of percolation," Working Papers 13-02, Eindhoven Center for Innovation Studies, revised Feb 2013.
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    3. Haibo Hu & Jonathan J. H. Zhu, 2017. "Social networks, mass media and public opinions," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(2), pages 393-411, July.
    4. Hüseyin İkizler, 2019. "Contagion of network products in small-world networks," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(4), pages 789-809, December.

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